Private equity consortium the latest to approach satellite operator.
Latest bid for Inmarsat comes by private equity consortium
- Latest bid comes as little surprise following failed bids by Echostar and Eutelsat.
- Issues at the Maritime business are abating and Aviation business remains strong.
- We believe Inmarsat may argue to remain independent, not recommending offer to shareholders.
We have long believed Inmarsat remained a takeover target following the failed bids by Echostar and Eutelsat last year so it comes as little surprise that Inmarsat have announced an approach was made by a consortium including APAX Partners, Warburg Pincus and the Canadian Pension Plan Investment groups. The offer price is $7.21, roughly a 24% premium to yesterday’s close price. While the shares this morning have risen by just over 17% to £5.11, it falls some way short of the sterling equivalent takeover price of £5.45. Why?
Firstly it is a non-binding offer, nothing definite. Secondly, Inmarsat was adamant in remaining independent when Echostar made their approach at a slightly lower price, as Inmarsat’s management believed by remaining independent they could deliver more shareholder value over the long term. However, since Echostar and Eutelsat dropped their bids, the shares on Inmarsat drifted lower, breaching below £4. A profit warning mostly relating to its struggling and largest division Maritime did not help.
The offer made on 31st January by the consortium was not made public and since then the shares staged a modest recovery. But the offer also came before the publication of the full year results which were on the whole fairly encouraging. Its seems the issues at the Maritime business are abating and their Aviation business is doing very well led by the double digit increase in revenues for in-flight communication services by airlines. With this pace of growth expected to continue, this could end up being its most significant division.
Therefore we believe once again Inmarsat may argue to remain independent and not recommend this offer to shareholders which we believe explain why the shares this morning is not trading closer to the takeover price.
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